CONSOL Energy

CONSOL Energy is a Cannonsburg, Pennsylvania-based coal and gas company.

CONSOL is one of the biggest producers of coal in the U.S., with the majority of mines located in West Virginia. (Detailed information about its coal production can be found below at the CONSOL Coal Production section.) It is also involved in the controversial practice of fracking for methane gas in the Northeastern U.S. in the Marcellus Shale region.

Executive Summary
CONSOL Energy is one of the fastest growing fracking companies in the Marcellus Shale region of the U.S. since it began drilling there in 2008. It owns 760,000 acres in the Marcellus area, concentrating on drilling in Pennsylvania and West Virginia.

It has been reporting annual revenues of between $3.7 billion and $5.4 billion a year over the past four years. Its CEO has an annual compensation of $12.87 million. CONSOL/CNX and its executives have also been very active in making partisan political donations, predominantly in favor of Republicans. This company, headquartered in Cannonsburg, Pennsylvania, has invested significant funds in elections in Pennsylvania and West Virginia, states with large shale deposits, and its PAC was a major spender in the election of the new governor of Pennsylvania, Tom Corbett.

CONSOL/CNX has a notorious safety record and has been accused of numerous safety violations, including polluting rivers and spoiling drinking water by contaminating it with methane gas.

Methane Gas Drilling (Fracking)
"CONSOL's Gas Division was formed in the first half of 2010 when it acquired the remaining 16.7% outstanding shares held by outside stockholders of CNX Gas Corporation, a former CONSOL spin-off company, as well as all of the exploration and production business of Dominion Resources Inc., located in the Appalachian Basin." In June, 2010, Consol Energy completed its acquisition of CNX Gas shares as part of Consol's plan to expand its fracking business. CNX is run as the methane gas subsidiary of CONSOL Energy. CNX has over 230,000 acres in the Marcellus Shale area. On March 15, 2010, CONSOL announced the purchase of Dominion’s Exploration and Production business for $3.475 billion. The sale included 193 employees currently working for Dominion. CONSOL is looking for $4 billion to fund the purchase and further develop the operations. Bank of America, Merrill Lynch and Stifel, Nicolaus & Company were financial advisors for CONSOL, while Barclays Capital Inc. advised Dominion. Legal counsel for CONSOL came from Wachtell, Lipton, Rosen & Katz and Akin Gump Strauss Hauer & Field LLP. Baker Botts LLP served as Dominion’s legal adviser.

Though lauded as an environmentally-friendly alternative to coal, fracking for gas has been linked to depleting drinking water resources of local communities and polluting the wells of the people living around drill sites. According to a 2010 article in Vanity Fair, "as use of the technique (fracking) has spread, it has been followed by incidents of water contamination and environmental degradation, and even devastating health problems." And according to data released to the EPA, Halliburton, a major supplier of fracking fluid, admitted using 807,000 gallons of diesel-based chemicals in its fluids, in violation of an agreement drillers had with the EPA.

Partisan Political Activity
Although CONSOL Energy has donated to campaigns on both sides of the aisle since it began drilling in the Marcellus Shale area in 2008, the majority of its political donations has gone to pro-fracking Republicans. 2010 was the biggest year in gas and oil political contributions by corporations hoping to encourage lawmakers to continue with the lax restrictions surrounding methane gas drilling. Nowhere is this seen more than in Pennsylvania, where the majority of the Macellus Shale area lies.

According to Common Cause of Pennsylvania's May 2010 report, "Deep Drilling, Deep Pockets," CONSOL doled out $270,800 in campaign contributions from Jan. 1, 2001 through Mar. 2010. .

During the 2010 elections, CONSOL's political action committee and employees together gave $340,435.31 to political candidates. $46,000 of that money went to Governor Tom Corbett - a known ally of fracking companies in Pennsylvania who supported a no-tax stance for methane drilling corporations - while $36,800 went to Democratic candidate Dan Onorato.

"Senate candidate Joe Scarnati, (R-Brockway, PA), had his ticket, plane ride and hotel bill paid for by Consol Energy Inc., according to Mr. Scarnati's top aide. Scarnati and other top Senate Republicans were frequently singled out by former Gov. Ed Rendell and environmental advocates for blocking an extraction tax on shale drilling."

CONSOL also, along with other big Marcellus Shale players like Range Resources, Cabot Oil and Gas and Chesapeake Energy, each paid $25,000-$50,000 for Governor of Pennsylvania Tom Corbett's two-day inaugural party.

Corporate Political Action Committee
The CONSOL PAC raised $373,710 and spent $282,324 in 2010. The top three House candidates who benefited from CONSOL's PAC where: Jason Altmire (D-PA) received $7,000; Rick Boucher (D-VA) received $7,000; Tim Murphy (R-PA) received $7,000. Altmire is on the Subcommittee on Railroads, Pipelines, and Hazardous Materials and the Subcommittee on Water Resources and Environment. Boucher, who was defeated in 2011, was on the Subcommittee on Energy and Environment. Murphy is on the House Energy and Commerce Committee and is was named Vice-Chair of the Subcommittee on the Environment and Economy.

The top three Senate candidates were: Arlen Specter (D-PA) received $8,000; Pat Toomey (R-PA) received $10,000; James Webb (D-VA) received $5,000. Specter, who was defeated in 2011 by Pat Toomey, served on the Subcommittee on Agriculture, Rural Development,Food and Drug Administration, and Related Agencies and the Subcommittee on Superfund, Toxics and Environmental Health among others. Webb is on the Joint Economic Committee.

The 2008 election year was another big year in CONSOL PAC donations. The PAC raised $50,057 and $136,993 was given to candidates and other PACs. House candidate Mike Doyle (D-PA) received $6,000. Charlie Wilson (D-OH) received $4,000. Doyle, from Pittsburgh, serves on the House Energy and Commerce Committee and the Energy and Power Subcommittee. Wilson, who lost his bid in 2010, served on the Subcommittee on Capital Markets, Insurance, and Government-Sponsored Enterprises.

Senate candidate Saxby Chambliss (R-GA) received $5,000 and Mark Warner (D-VA) received $3,000. Chambliss serves on the Senate Committee on Agriculture, Nutrition & Forestry among others. Warner has a big interest in energy and bringing more energy jobs to Virginia.

Political Donations by Company Execs
Board members and senior management have donated large amounts of money to CONSOL & CNX Energy PAC and candidates. State records show that CONSOL Energy employees have donated $62,202 to candidates and the company's PAC.

Here is a breakdown of company executives and the money they have donated:


 * J. Brett Harvey - CEO, President and Chairman - $1.23 million (biggest donations were to John McCain and Sarah Palin, the Republican National Committee and the National Mining Association's PAC)
 * William Lyons - Executive Vice President and CFO of the CONSOL and CNX Gas - $33,149
 * P. Jerome Richey - Secretary, Executive Vice President of Corporate Affairs, Chief Legal Officer of Company and CNX - $20,117
 * Robert and Karie King - Executive Vice President of Business Advancements, Support Services of CONSOL and CNX - $17,548
 * Nicholas Deiuliis - Director, President and COO of CNX Gas and Executive Vice President and COO of CONSOL - $12,212

Marcellus Money shows that CONSOL Energy and CNX have given $340,435.31 to Pennsylvania politicians since 2001.

Lobbying
Open Secrets reported that CONSOL spent $3.1 million on lobbying in 2010. Tommy Johnson is the principle lobbyist for CONSOL.

CNX also uses Stanley Rapp with Greenlee Partners, who also represents Range Resources-Appalachia.

Front Groups
Consul Energy is a supporter of several special interest groups that push for expanded drilling rights and limited or no regulation of fracking.

Consol is involved in the following front groups, who donate to pro-fracking candidates and lobbyists: Marcellus Shale Coalition, Energy In Depth, Nicholas DeIuliis of CNX is on the Board of Directors for the Independent Petroleum Association of America (IPAA), Gary Slagel, a Chairman for CNX Gas is on the Executive Committee for The Pennsylvania Independent Oil and Gas Association (PIOGA), Gary Slagel and VP of Legal Kevin West are both on the Board of Directors for the West Virginia Oil and Natural Gas Association and the Independent Oil and Gas Association of West Virginia.

Health and Safety Violations Alleged or Proven
Consol has paid $29,428,489 in coal mining fines between 2000 - 2009. 20,899 violations and 23 deaths have also taken place in CONSOL mines since 2000.

2011: Consol Energy was cited for a violation by the Mine Safety and Health Administration that contributed to the death of a West Virginia coal miner in 2010. The MSHA report stated "Consol failed to adequately support a section of a rock wall that fell on miner Jesse Adkins at its Loveridge No. 22 mine July 29. The accident occurred while Consol was mining outside the coal seam through an area of solid rock. Consol didn't install bolts to strengthen rock walls in the area. Adkins, 39, was pinned between a piece of heavy equipment and a 23-foot-long, 4-foot wide chunk of rock at the Marion County mine." MSHA hasn't assessed a fine for the violation yet. 2010: In September, several thousand fish washed up along the banks of Dunkard Creek in Monongalia County, West Virginia. "Environmental officials in Pennsylvania and at the federal Environmental Protection Agency say mining discharges from Consol Energy’s Blacksville No. 2 mine created the conditions for the algae to bloom."

In fracking violations, the Pennsylvania Department of Environmental Protection Web site shows that CONSOL/CNX Energy has 9 violations since 2008. Many were health and environmental safety violations. Here is a list of the most frequent ones: "Polluting waters by allowing discharge into waters of the Commonwealth"; "Failure to properly control or dispose of industrial or residual waste to prevent pollution of waters"; "Potential for polluting substances reaching waters".

2010: "The Environmental Protection Agency fined CNX $157,500 for violations of the Safe Drinking Water Act stemming from improper use and faulty reporting at an underground injection well in Greene County facility for fracking fluids in Greene County. Consol uses the well to dispose of wastewater from its methane well drilling operations. CNX also accepted at least 100 truckloads of wastewater with total dissolved solids levels “significantly higher” than its federal permit allowed. The move also requires CNX to close down that disposal well."

Lawsuits
2010: "Legal claims were filed in June in U.S. District Court in Abingdon, Virginia on behalf of two landowners by attorneys seeking class action status to represent thousands of property holders in six southwest counties." EQT Corp. and Consol Energy are being sued for allegedly drilling thousands of wells in southwest Virginia's coalbed to remove methane gas without obtaining legal claim to the resource from the landowners, contending the mineral rights were held by the coal companies. "An attorney for the landowners estimated the companies realized billions of dollars from southwest Virginia drilling while the escrow account totals about $26 million from 800 individual accounts. In Buchanan County alone one year, Consol's gas subsidiary, CNX Gas Co., realized $1 billion in revenues from natural gas drilling." Landowners are asking for billions in back royalty payments. April: "A CXG investor filed a lawsuit in Delaware State Court on behalf of current investors in CNX Gas Corporation who purchased their CXG shares before March 21, 2010 over an alleged breach of their fiduciary duties by CONSOL Energy, Inc. According to the complaint, the plaintiff alleges that CONSOL Energy, as the controlling shareholder of CNX Gas Corp, seeks to take over the remaining outstanding CXG shares through an unfair process and for an unfair price." November: A Mt. Pleasant, Pennsylvania family filed a lawsuit against Consol Energy for underpayment of methane gas royalties. They are seeking class-action status, which could include more than 1,000 plaintiffs. "The plaintiffs said they entered into separate lease agreements with the company under which they would receive royalties based on the amount of gas collected each month from their land. The company is accused of breaching the leases by taking "volumetric deductions" and calculating royalties using a price that was less than the price paid to the companies." The family leased oil and gas rights to Dominion Exploration & Production Inc. for property in Fayette County, Pennsylvania. Consol acquired Dominion's rights to the lease in 2010.

Revenue and Profits
2010 Revenue: $5.36 billion Gross Profit: $1.69 billion

2009 Revenue: $4.62 billion Gross Profit: $1.56 billion

2008 Revenue: $4.65 billion Gross Profit: $1.4 billion

2007 Revenue: $3.76 billion Gross Profit: $955 million

2006 Revenue: $3.7 billion Gross Profit: $1.05 billion

Executives and Annual Compensation

 * CEO, President and Chairman J. Brett Harvey: $12.87 million
 * COO and Executive Vice President Nicholas J. DeIuliis, J.D.: $1.4 million
 * Executive Vice President of Business Advancements, Support Services of CONSOL and CNX Robert P. King: $1.5 million
 * Executive Vice President and Chief Financial Officer of the CONSOL and CNX Gas William J. Lyons: $5.6 million
 * Secretary, Executive Vice President of Corporate Affairs, Chief Legal Officer of Company and CNX P. Jerome Richey: $1.7 million

Executives

 * J. Brett Harvey: CEO, President and Chairman - Forbes says that Harvey has been the "Director of CNX Gas since June 30, 2005, the date of its formation, and has served as Chairman of the Board and CEO since January 16, 2009. He has also served as President, CEO and a Director of CONSOL Energy since January 1998. Harvey is a member of the board of directors of the Bituminous Coal Operators Association and a member of the executive committee and the board of the American Coalition for Clean Coal Energy. He is also the Chairman of the Board of Directors of the National Mining Association. In December 2005, he was elected to the board of directors of Barrick Gold Corporation, the world's largest gold producer. He serves on the Barrick compensation and environmental, health and safety committees. In December of 2007, Harvey was also elected to the board of directors of Allegheny Technologies Incorporated, a specialty metals producer, and serves on its nominating and corporate governance and compensation committees.
 * Nicholas J. Deluliis: COO and Executive Vice President - "DeIuliis was a Director, President and CEO of CNX Gas Corporation from June 30, 2005 to January 16, 2009, when he became President and COO of CNX Gas and Executive Vice President and COO of CONSOL Energy. From November 2004 until August 2005 he was the Senior Vice President of Strategic Planning of CONSOL Energy. Prior to that, DeIuliis served as Vice President of Strategic Planning from April 2002 until November 2004. On May 28, 2010, pursuant to the documents effecting the Merger, the directors of the company were removed and replaced with a new board of directors, consisting of Nicholas J. DeIuliis, the Company's President and COO.
 * Robert P. King: Executive Vice President of Business Advancements, Support Services of CONSOL and CNX - "King became Executive Vice President of Business Advancement and Support Services of CONSOL Energy and CNX Gas Corporation on January 16, 2009. Prior to that, he was Senior Vice President of Administration since February 2, 2007 and he served as Vice President of Land from August 2006 to February 2007. Prior to joining CONSOL Energy, King was Vice President of Interwest Mining Company (a subsidiary of PacifiCorp).
 * William J. Lyons: Executive Vice President and CFO of the CONSOL and CNX Gas - "Lyons has been Chief Financial Officer of CONSOL Energy since February 2001 and Chief Financial Officer of CNX Gas Corporation since April 28, 2008. He added the title of Executive Vice President of CONSOL Energy on May 2, 2005 and of CNX Gas Corporation on January 16, 2009. From January 1995 until February 2001, Lyons held the position of Vice President of Controller for CONSOL Energy. Lyons joined CONSOL Energy in 1976. He was a Director of CNX Gas Corporation from October 17, 2005 to January 16, 2009. Lyons is also a director of Calgon Carbon Corporation, a supplier of products and services for purifying water and air.
 * P. Jerome Richey: Secretary, Executive Vice President of Corporate Affairs, Chief Legal Officer of Company and CNX - "Richey became Executive Vice President of Corporate Affairs and Chief Legal Officer of CONSOL Energy and CNX Gas Corporation on January 16, 2009. He was Vice President, General Counsel and Corporate Secretary of CONSOL Energy since March 2005, and on June 20, 2007, he added the title of Senior Vice President. Prior to joining CONSOL Energy, Richey, for more than five years, was a shareholder in the Pittsburgh office for the law firm of Buchanan Ingersoll & Rooney PC.

In March 2009, William Bruno, a retired 30-year veteran of CONSOL energy, released his book, "The King Rat and His Court: Lessons in Corporate Greed.

CONSOL Coal Production
CONSOL Energy operates 17 coal mines and produced 67.4 million tonnes in the 2006 calendar year. The bulk of the coal produced in 2006 came from operations in West Virginia (31 million tonnes) and Pennsylvania (24.4 million tonnes) with smaller volumes from Virgina (5.7 million tonnes) and Kentucky (4.9 million tonnes). CONSOL also produced 1.1 million tonnes from a mine in Utah and 300,000 tonnes from an operation in Ohio. Approximately 97% of the coal produced by CONSOL Energy was from underground mines.

In the coal mining lobby donated $10,423,347 to members of Congress. Of that, the top three major contributors included Arch Coal, CONSOL Energy and Peabody Energy.

CONSOL cuts back on coal production
In March 2009, CONSOL placed its Mine 84 in Washington on what it terms "long term idle" status, laying off about 275 employees. The company also reduced the hours worked at its Buchanan mine in northern West Virginia and has lowered a 2009 production target to 3.1 million tons for the mine, about three-fourths of its total capacity. Vice President Thomas Hoffman said, "We're basically throttling back."

The reductions stem from a dramatic reversal of industry trends. After surging in 2007 and most of 2008, the demand and pricing for coal collapsed in the last quarter of 2008.

In August 2009, CONSOL CEO J. Brett Harvey said the entire coal industry needed to slow production until existing inventory could be depleted. Harvey said that coal prices have gone down as the economy has slowed demand, and that stockpiled coal inventory will need to be burned before prices can rebound. To adjust to the reduced demand, CONSOL lowered its expected production levels for 2009 to 58 million tons.

2009: CONSOL idling mines in West Virginia
In December 2009, CONSOL announced it was idling two mines in West Virginia that employ about 500 people. Chief Operating Officer Nicholas DeIuliis blamed environmental activists for the closures, saying that "the nation's energy industries are coming under repeated assault from nuisance lawsuits and appeals of environmental regulations." The two mines affected are the Little Eagle Coal Co. mine and the Fola Coal Co. mine. In a lawsuit brought by the Ohio Valley Environmental Coalition (OVEC), a federal judge suspended CONSOL's Clean Water Act permit for part of the operations. Without these operations, CONSOL said it was unable to meet the requirements of its coal sales contracts. Jane Keating, executive director of OVEC, said that CONSOL's accusations of blame were misplaced and that "miners should be asking the companies to follow the law."

On December 28, 2009, U.S. District Judge Robert Chambers changed his ruling to allow CONSOL to continue mining at the sites while the legal dispute over the company's fill permits continues. In his latest order, Chambers noted that OVEC did not oppose the decision.

2010: CONSOL closing mine in PA, idling mine in UT
On October 1, 2010, Consol said it will close its Pennsylvania Mine 84 and idle its Utah Emery Mine by December 2010 because of the operating costs. The moves come as Consol has been diversifying away from coal, acquiring the 17% of CNX Gas it didn't already own in June 2010, and earlier buying Dominion Resources' natural gas business. Pearce Hammond, director of institutional research with Simmons & Co. International, said there's no need for excess coal in the market, especially when prices for the thermal coal used in power plants are under pressure.

2011: Increase in coal production
In April 2011, CONSOL Energy said production at its Coal Division had reached 17.2 million tons for the quarter, the highest since 2008. The company expected its 2011 coal production to be about 60-62 million tons.

2011: Consol to pay over $200 million in Clean Water violations
On March 14, 2011, Consol Energy announced it will spend $200 million on a treatment system for wastewater from three West Virginia coal mines, and pay the state and federal governments a total of $6 million to settle hundreds of alleged violations of the Clean Water Act. The federal fines, which will be split between the EPA and the state, totaled $5.5 million. Consol also agreed to pay the West Virginia Division of Natural Resources $500,000 for the damage to Dunkard Creek, a Monongahela River tributary that runs for 43 miles along the Pennsylvania-West Virginia border.

Though it denies its operations were responsible for the fish kill, Consol stopped discharging wastewater from its Blacksville 2 Mine after a September 2009 bloom of toxic golden algae killed countless fish, mussels, salamanders and other aquatic life. Investigators concluded that pollutants called total dissolved solids created conditions that helped that algae bloom flourish, choking off oxygen to the aquatic creatures. Although high levels of TDS have not been labeled a threat to human health, they can affect the taste and smell and drinking water.

EPA Region 3 Administrator Shawn Garvin said Consol's new network of pipelines and the reverse osmosis treatment plant it is building near Mannington will keep nearly 100 million pounds of TDS, including salts, out of the watershed each year. The system will treat water from the Blacksville 2 Mine, Loveridge 22 Mine and Robinson Run 95 Mine, and improve the overall health of rivers and streams. Consol's treatment plant must be online by May 2013 under the agreement. When finished, the plant should be able to treat 3,500 gallons of mine water per minute, eliminating an anticipated 95 percent of the pollutants. Consol is also planning to build a similar $100 million treatment facility for its Buchanan Mine 1 in Virginia.

The settlement covers alleged violations at six Consol operations over the past four years. The government cited chronic problems with chloride discharges into the Monongahela watershed from the Blacksville, Loveridge, Robinson Run and Four States mines, and into the Ohio River from the Shoemaker and Windsor mines.

Proposed coal mines
Spring Branch 3 Mine is a proposed surface coal mine by CONSOL Energy for Mingo County, West Virginia. In February 2011, CONSOL Energy reached a deal with the U.S. Environmental Protection Agency for a Clean Water Act Section 404 permit covering the company’s proposed mine.

March 26, 2009: DC Rising Tide disrupts CTL conference in Washington, DC
Activists with DC Rising Tide interrupted an industry conference to denounce coal-to-liquids technologies. The protesters stood in the audience and gave loud speeches refuting the statements of executives from Chevron, CONSOL Energy, World Coal Institute, and World Petroleum Council. Displaying banners including "Coal kills" and "Renewable energy now," the activists called for an end to fossil fuels and for adoption of clean, renewable energy sources.

Court finds Army Corps of Engineers violated Clean Water Act in MTR permitting case
On November 24, 2009, U.S. District Judge Chuck Chambers ruled that the U.S. Army Corps of Engineers violated federal environmental laws by issuing permits for two mountaintop removal coal mines in West Virginia without allowing sufficient public involvement. Chambers found that the Corps violated the Clean Water Act and National Environmental Policy Act when it issued permits for CONSOL's Ike Fork mines and Penn Virginia's Nellis mine. Chambers ordered the Corps to rectify the problem with the permits, while also allowing "limited" mining to continue at the sites for 60 days. The case may have implications for other surface mines already permitted and in operation. According to Oliver Bernstein of the Sierra Club, "Most of the pending permits in West Virginia may need to go back through the public process."

Coal Projects Sponsored by CONSOL
Cancelled
 * Benwood Project (West Virginia)
 * First Energy/Consol IGCC (Ohio)
 * FutureGen (Illinois]

Contact Information
General Office CONSOL Energy Inc. CNX Center 1000 Consol Energy Drive Canonsburg, PA 15317-6506 Phone: 724-485-4000

CNX Gas CNX Center 1000 Consol Energy Drive Canonsburg, PA 15317-6506 Phone: 724-485-4000

CNX Land Resources Inc. CONSOL Energy Inc. CNX Center 1000 Consol Energy Drive Canonsburg, PA 15317-6506 Phone: 724-485-4518

Pittsburgh CONSOL Energy Inc. CNX Center 1000 Consol Energy Drive Canonsburg, PA 15317-6506

Philadelphia 1500 Lancaster Ave. Suite 205 Paoli, PA 19301

Website: http://www.consolenergy.com/

Related SourceWatch Articles
Source Watch has a special clearinghouse on fracking, Fracking for Gas


 * Existing U.S. Coal Plants
 * West Virginia and coal
 * United States and coal
 * Global warming
 * CNX Marine Terminal

External Resources

 * Open Secrets
 * Campaign Money.com
 * Marcellus Shale.us
 * Common Cause
 * Propublica
 * West Virginia State Donor Lookup
 * Pennsylvania State Donor Lookup
 * Consol Energy